GoodRx Holdings Inc
For the period ended Jun 30, 2024. Filed Aug 8, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 8, 2024
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-09.
0001809519-24-000083
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0001809519-24-000164
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 272 previous paragraphs and 371 current paragraphs.
174 unchanged; 76 reworded; 99 added; 21 removed; 1 previous and 22 current paragraphs rearranged.
Tables are not compared: 5 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (99)
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•Net income andnet income margin were$6.7 million and 3.3%, respectively, compared tonet income andnet
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income margin of$58.8 million and 31.0%, respectively; and
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•Adjusted EBITDA and Adjusted EBITDA Margin were$65.4 million and 32.6%, respectively, compared to$53.5
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million and 28.2%, respectively.
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•Revenue and Adjusted Revenue increased 7% to$398.5 million from$373.7 million;
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•Net income andnet income margin were$5.7 million and 1.4%, respectively, compared tonet income andnet
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income margin of$55.5 million and 14.9%, respectively; and
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$106.7 million and 28.6%, respectively.
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Recently, we have seen rapid changes in the U.S. retail pharmacy landscape with Rite Aid's store closures in addition to
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announcements of store closures and reduction of footprint from various other retail pharmacies, including Walgreens.
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Future store closures and reduction of footprint from retail pharmacies are expected to have an immediate adverse impact
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on our prescription volume and prescription transactions revenue. However, we believe this impact to be largely transient as
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we expect prescription volume to migrate to other in-network pharmacies in the near term. As an extension of the changing
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retail pharmacy landscape, we expect heightened renegotiations between pharmacies and PBMs may occur as a result of
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the pharmacies' increased focus on rationalizing of their spending, which in turn may have an impact on our prescription
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transactions revenue.
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Recent Development
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On July 10, 2024, we entered into the Sixth Amendment to First Lien Credit Agreement. See Note 6 to our condensed
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consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.
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Margin:
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(5)Loss on operating lease assets include losses incurred relating to the abandonment or sublease of certain leased
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office spaces.
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Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023
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served by certain PBMpartners. We expect the recently announced Rite Aid's store closures to have a mid-single-digit
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million dollar impact on prescription transactions revenue in the second half of 2024.
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offering.
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Cost of revenue decreased $4.5 million, or 27%, year-over-year, primarily driven by a $4.1 million decrease in
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solutions offering in the second half of 2023. The impact from these drivers was partially offset by a $1.0 million increase in
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million increase in third-party services and contractors associated with product development and allocated overhead.
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recognized in the second quarter of 2023 of previously recognized stock-based compensation expense as certain
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performance milestones were no longer probable of beingmet, in addition to changes in our employee composition. The
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year-over-year change was also driven by a $4.8 million increase in advertising expenses anda $2.5 million increase in
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included in our 2023 10-K.
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General and administrative expenses decreased $2.6 million, or 9%, year-over-year, primarily driven by a $4.2 million
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Interest Income
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Interest income decreased by$1.5 million year-over-year, primarily due to lower average balance of cash equivalents
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held in U.S. treasury securities money market funds, partially offset by higher interest rates.
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benefit of$46.7 million for thethree months ended June 30, 2023 and an effective income tax rate of 42.5% and(387.1%),
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respectively. The year-over-year change in ourincome taxes was primarily driven by the release of our valuation allowance
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against the majority of our net deferred tax assets recorded as a discrete tax benefit in the second quarter of 2023, partially
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•Net loss andnet loss margin were$1.0 million and 0.5%, respectively, compared tonet loss andnet loss
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margin of$3.3 million and 1.8%, respectively; and
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million and 28.9%, respectively.
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sequentially decline through July 2024, the expected sunset of the program. Gold subscription plans increased year-over-
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year andaccounted for 708 thousand of our total subscription plansas of March 31, 2024.
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served by certain PBM partners. The impact from the increase in the number of our Monthly Active Consumers was partially
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offset by anincrease in consumer discounts, which are all recognized as a reduction of revenue beginning in December
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plans relative to subscription revenue.
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Cost of revenue decreased $4.2 million, or 25%, year-over-year, primarily driven by a $3.8 million decrease in
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solutions offering in the second half of 2023. The impact from these drivers was partially offset by a $1.1 million increase in
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compensation expense due to changes in our employee composition, and a $2.7 million increase in third-party marketing
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of revenue as described in our discussion and analysis of prescription transactions revenue above.
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Note 7 to our condensed consolidated financial statements) and a $3.3 million increase in payroll and related expenses,
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of 2024. The impact from these drivers was partially offset by a $4.5 million decrease in stock-based compensation expense
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respectively, and an effective income tax rate of 444.4% and 191.5%, respectively. The year-over-year decrease in our
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income tax expense was primarily driven by a decrease in our estimated annual effective income tax rate due to the release
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of our valuation allowance in the second quarter of 2023 and a decrease in our tax effects from our equity awards.
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revolving credit facility. For additional information regarding our revolving credit facility and our term loan, see Note 6 to our
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information of GoodRx Holdings, Inc.
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receivable.
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options. The$146.9 million year-over-year increase in net cash used in financing activities was primarily driven by a$143.7
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our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-
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our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report
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Q, as well as Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and
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on Form 10-Q, as well as Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of
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Part II, Item 8, “Financial Statements and Supplementary Data” included in our Annual Report on Form 10-K for the fiscal
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Operations” and Part II, Item 8, “Financial Statements and Supplementary Data” included in our Annual Report on Form 10-
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year ended December 31, 2023 filed with the Securities and Exchange Commission ("SEC") on February 29, 2024 (“2023
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K for the fiscal year ended December 31, 2023 filed with the Securities and Exchange Commission ("SEC") on February 29,
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10-K”). This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving
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2024 (“2023 10-K”). This discussion contains forward-looking statements based upon current plans, expectations and beliefs
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risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements
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involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking
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as a result of various factors, including those set forth in the "Risk Factors" section of our 2023 10-K and other factors set
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statements as a result of various factors, including those set forth in the "Risk Factors" section of our 2023 10-K and other
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forth in other parts of this Quarterly Report on Form 10-Q and our filings with the SEC.
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factors set forth in other parts of this Quarterly Report on Form 10-Q and our filings with the SEC.
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•Revenue and Adjusted Revenue increased 8% to$197.9 million from$184.0 million;
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•Revenue and Adjusted Revenue increased 6% to$200.6 million from$189.7 million;
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•Adjusted EBITDA and Adjusted EBITDA Margin were$62.8 million and 31.7%, respectively, compared to$53.2
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•Adjusted EBITDA and Adjusted EBITDA Margin were$128.2 million and 32.2%, respectively, compared to
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Revenue, net loss andnet loss margin are financial measures prepared in conformity with accounting principles
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Revenue, net income andnet income margin are financial measures prepared in conformity with accounting principles
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We exited thefirst quarter of 2024 with approximately 8 million prescription-related consumers that used GoodRx
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We exited thesecond quarter of 2024 with over 7 million prescription-related consumers that used GoodRx across our
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across our prescription transactions and subscription offerings. Our prescription-related consumers represent the sum of
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prescription transactions and subscription offerings. Our prescription-related consumers represent the sum of Monthly Active
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Monthly Active Consumers for thethree months ended March 31, 2024 and subscribers to our subscription plans as of
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Consumers for thethree months ended June 30, 2024 and subscribers to our subscription plans as of June 30, 2024.
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of reduced marketing spend in relation to that offering. We expect our subscription plans for Kroger Savings to continue to
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of reduced marketing spend in relation to that offering, which sunset in July 2024.
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The following table presents a reconciliation ofnet loss and revenue, the most directly comparable financial measures
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The following table presents a reconciliation ofnet income and revenue, the most directly comparable financial
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calculated in accordance with GAAP, to Adjusted EBITDA and Adjusted Revenue, respectively, and presentsnet loss
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measures calculated in accordance with GAAP, to Adjusted EBITDA and Adjusted Revenue, respectively, and presentsnet
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margin, the most directly comparable financial measure calculated in accordance with GAAP, with Adjusted EBITDA Margin:
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income margin, the most directly comparable financial measure calculated in accordance with GAAP, with Adjusted EBITDA
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(1)Financing related expenses include third party fees related to proposed financings.
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(1)Financing related expenses include third party fees relatedto proposed financings.
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(3)Restructuring related expenses include employee severance and other personnel related costs in connection with
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(3)Restructuring related expenses include employee severance and other personnel related costsand losses on office
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various workforce optimization and organizational changes to better align with our strategic goals and future scale.
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lease terminations in connection with various workforce optimization and organizational changes to better align with
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(5)Revenue was equal to Adjusted Revenue as there was no client contract termination cost associated with
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(6)Revenue was equal to Adjusted Revenue as there was no client contract termination cost associated with
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Prescription transactions revenue increased $10.5 million, or 8%, year-over-year, primarily as a result of a 10% increase
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Prescription transactions revenue increased $10.2 million, or 7%, year-over-year, primarily as a result of an 8% increase
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which integrates our discounts and pricing in a seamless experience at the pharmacy counter for eligible plan members
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which integrates our discountsand pricing in a seamless experience at the pharmacy counter for eligible plan members
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Subscription revenue decreased $1.5 million, or 6%, year-over-year, primarily driven by adecrease in the number of
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Subscription revenue decreased $1.9 million, or 8%, year-over-year, primarily driven by adecrease in the number of
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subscription plansdue to the anticipated sunset of Kroger Savings with 778 thousand subscription plans as of March 31,
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subscription plans due to the sunset of Kroger Savings with 696 thousand subscription plans as of June 30, 2024 compared
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2024 compared to 1,007 thousand as of March 31, 2023. Given the subscription fee is higher for Gold relative to Kroger
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to 969 thousand as of June 30, 2023. Given the subscription fee is higher for Gold relative to Kroger Savings, the sunset of
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Savings, we expect the anticipated sunset of Kroger Savings will result in a higher year-over-year decline in subscription
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Kroger Savings resulted in a higher year-over-year decline in subscription plans relative to subscription revenue.
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Pharma manufacturer solutions revenue increased $4.1 million, or 20%, year-over-year, primarily driven by organic
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Pharma manufacturer solutions revenue increased $2.2 million, or 9%, year-over-year, primarily driven by organic
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by a $2.4 million decrease in revenue contribution from vitaCare Prescription Services, Inc., a solution we de-prioritized in
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by a $2.7 million decrease in revenue contribution from vitaCare Prescription Services, Inc. ("vitaCare"), a solu tion we de-
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connection with the restructuring of our pharma manufacturer solutions offeringin the second half of 2023. We expect
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prioritized in connection with the restructuring of our pharma manufacturer solutions offering in the second half of 2023. We
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pharma manufacturer solutions to continue to grow as a percentage of total revenue in the near to medium term as we
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expect pharma manufacturer solutions to continue to grow as a percentage of total revenue in the near to medium term as
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continue to scale and expand available services, capabilities and platforms of our pharma manufacturer solutions offering.
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we continue to scale and expand available services, capabilities and platforms of our pharma manufacturer solutions
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outsourced and in-house personnel and other costs related to consumer support and a $2.1 million decrease in allocated
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outsourced and in-house personnel and other costs related to consumer support and a $1.7 million decrease in allocated
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Product development and technology expenses decreased $1.9 million, or 6%, year-over-year, primarily driven by a
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Product development and technology expenses decreased $0.4 million, or 1%, year-over-year, primarily driven by a
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$3.0 million decrease in payroll and related costs largely due tohigher capitalization of certain qualified costs related to the
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$2.3 million decrease in payroll and related costs largely due to higher capitalization of certain qualified costs related to the
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development of internal-use software and lower average headcount.
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development of internal-use software and lower average headcount. The impact of this driver was partially offset by a $1.4
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Sales and marketing expenses increased $11.4 million, or 15%, year-over-year, primarily driven by a $10.1 million
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Sales and marketing expenses increased $16.0 million, or 21%, year-over-year, primarily driven by a $14.5 million
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increase in advertising expenses, a $7.3 million increase in payroll and related costs, principally from higher stock-based
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increase in payroll and related costs, principally from higher stock-based compensation expense due to a reversal
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expenses. The impact from these drivers was partially offset by a $9.7 million decrease in promotional expenses
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third-party marketing expenses. The impact from these drivers was partially offset by a $6.6 million decrease in promotional
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For thesix months ended June 30, 2024 as compared to the same period of 2023:
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our strategic goals and future scale.
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decrease in stock-based compensation expense related to awards granted to our Co-Founders in 2020, partially offset by a
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Officer in the second quarter of 2023 and first quarter of 2024.
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manufacturer solutions offering in the second half of 2023.
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The following table sets forth our results of operations for thesix months ended June 30, 2024 and 2023:
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to the same period of 2023.
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Cost of revenue, exclusive of depreciation and amortization
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outsourced and in-house personnel and other costs related to consumer support and a $3.8 million decrease in allocated
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overhead, both due to lower average headcount principally as a result of the restructuring of our pharma manufacturer
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$5.3 million decrease in payroll and related costs largelydue to higher capitalization of certain qualified costs related to the
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development of internal-use software and lower average headcount. The impact of this driver was partially offset by a $2.2
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Note 7 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q) and a
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$4.3 million increase in payroll and related expenses, principally from equity awards granted to our Interim Chief Executive
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Officer in the second quarter of 2023 and first quarter of 2024. The impact from these drivers was partially offset by a$8.7
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Depreciation and amortization expenses increased $1.9 million, or 6%, year-over-year, primarily driven by higher
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amortization related to capitalized software due to higher capitalization costs for platform improvements and the introduction
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intangible assets as certain intangible assets were fully amortized in 2023 in connection with the restructuring of our pharma
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manufacturer solutions offering in the second half of 2023.
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Interest expense increased by$2.0 million, or 7%, year-over-year, primarily due to higher interest rates, partially offset
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$7.9 million increase in employee taxes paid related to net share settlement of equity awards, partially offset by a$10.5
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million increase in proceeds from exercise of stock options.
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pharma manufacturer solutions offering in the second half of 2023.